$10K to put towards debt.. Where though?

HKmaniac

New here, and wasn't sure where to post this.

I have $10,000 to put towards some of my financial debt. I have 3 options.

1. I have a 401K loan of $9,000
2. Auto loan with a balance of $21,000 (2.99% interest with 48 or so months to go)
3. Boat loan with a balance of $47,000 (4.87% interest with 12 years left)

Paying off the 401k loan would be the most satisfying, as I can accomplish this in one payment. I do not have any credit card debt (hence the 401k loan).

The auto loan I could refinance it with 10k down so I could shorten the length of the term, and get closer to paying off my vehicle.

The boat loan is the least satisfying since Im very far from paying it off, BUT it has the most impact on interest saved. Thinking roughly $9000 saved over the life of the loan. Even though I sure hope to not pay on it for 12 years.

Savings wise, I dont have much of a savings. I usually have about $2,000 in savings.

Im 30 years old, $100k year job. Wife makes $50k. Live in a moderate 1700sqft home.

End goal is to be mostly debt free. Once my truck is paid off, I will not purchase a new vehicle for many years. I will always on a boat as it is our passion, unfortunately boats are expensive.

Any advice would be appreciated.

DCFC79

You understand this is a UK based forum ?

What's a 40k loan ?

HKmaniac

Nope, but I after looking at a couple posts the £ symbol gave it away.. oops

401K is a retirement savings. Typically contributed by payroll deductions and employer contributions. You're also allowed to borrow from it, but must pay it back.

Dobbibill

You need to use the same theory as UK debtors use.

Pay off a lump on the loan with the highest interest rate, providing there's no penalties for overpayments.

Try using this snowball calculator which will show you how soon your debt will be paid off and how much you could save by paying off each debt in a particular order. Play about with your figures to get the best results long term. I've put it in a dollars currency ready for you

HKmaniac

Wow what a great calculator! thank you for that!

yasmin2

I think I would pay the £9000 off. Psychologically, beneficial for me as only 2 debts to pay off then. Whilst I know snowballing is the most financially effective I ended up paying smaller debts off first as could close them off completely but that's what worked for me.

Good luck!

DCFC79

HKmaniac wrote: »

Nope, but I after looking at a couple posts the £ symbol gave it away.. oops

401K is a retirement savings. Typically contributed by payroll deductions and employer contributions. You're also allowed to borrow from it, but must pay it back.

It's not a problem to post here as it's the same theory with debts.

I wish you luck.

dancingfairy

I have no idea how far your joint income will go but have you had a look at what you're paying out for and whether you can make any savings?
Maybe you have a coffee habit on the way to work or eat at work everyday or go to the pub once a week. I have no idea but it's worth thinking about how much you are spending and whether it's good value or whether you could out it towards debts.
Also here in the UK you can shop around for gas, electricity, insurance, phones etc etc. I don't know how much competition there is where you are or how easy it is to switch suppliers but you might be able to save by shopping around.
Good luck
Df